Fewer investor checks under TPP

Economic Development Minister Steven Joyce said the higher threshold was "not a particularly contentious issue" for New Zealand's negotiators. Photo / John Borren

• Threshold for screening foreign investment in New Zealand to be lifted from $100m to $200m
• In the last 5 years, 87 applications have been made by investors above the $100m threshold
• 52 per cent of those applications have been between $100m and $200m

The Trans Pacific Partnership could halve the number of major foreign investments in New Zealand which need to pass "good character" and business experience tests.

The Government requires foreigners who want to make an investment of more than $100 million to get approval from the Overseas Investment Office (OIO), which evaluates their record in business and their character.

Under the Trans Pacific Partnership (TPP), the threshold above which an investor will need this approval will rise from $100 million to $200 million.

OIO figures show that there were 45 applications in the past five years which were between $100 and $200 million, and would not have required screening if the TPP was in force - more than half of the 87 applications the OIO considered.

An OIO spokesman said none of the applications was declined.

Economic Development Minister Steven Joyce said the higher screening threshold was "not a particularly contentious issue" for New Zealand's negotiators when it was proposed by other TPP countries.

"There is no particular cost to New Zealand from an economic development perspective. It's good to encourage incoming investment and this reduces the red tape around that."

Mr Joyce said he had not been advised that the $100 million threshold had put off prospective investment. "But there's always a point at which it's not worthwhile for investors," he said.

Labour's finance spokesman Grant Robertson said his party had concerns about many of the OIO's processes, and would be concerned if the higher threshold increased the risk of bad investments.

New Zealand First leader Winston Peters said the threshold was already too low and the new policy would open New Zealand up to "dubious investment practices".

"At a time when huge sums of ill-gotten money are transferred around the world, and our checks through the Overseas Investment Office are already weak, we should be raising the bar against unscrupulous money merchants, not lowering it," Mr Peters said.

Mr Joyce disagreed, saying that money-laundering and anti-corruption systems were already in place.

"I don't think it creates any risks for New Zealand," he said.

A Government briefing paper said the TPP would not affect foreign purchases of sensitive land, which would continue to be screened to make sure they passed a "benefit to New Zealand" test.

New Zealand already has a higher threshold of $496 million for Australian investors as a result of its Closer Economic Ties agreement.

The Australian Government's threshold for screening foreign investments is $274 million, though the threshold is lower for some types of investment and there is a complete ban on sales of residential property to overseas buyers.